McMahon unsuccessfully tried to double the value of WWE's previous deal with NBCU

Questions are "emerging about what the future holds for WWE" after the company's stock plunged 44% on Friday after Chair Vince McMahon "failed in a high-stakes effort to wring a huge increase in television fees it receives" from NBCUniversal, according to Merissa Marr of the WALL STREET JOURNAL. The effort was "part of an effort to boost the company's stagnant revenues and declining profits." TV ratings for "Raw" on USA Network and "Smackdown" on Syfy are the "bread and butter" of WWE's business, "accounting for around 30% of revenue." Determined to "get a better deal for wrestling in light of the inflation in sports and event programming," McMahon played hardball in discussions with NBCU, "demanding to more than double the value of their previous deal," which was just shy of $100M. He "looked around for possible alternative TV partners, unsuccessfully, ending up renewing the NBCU deal with an increase that analysts estimate at around 50% -- still generous but well short of what Wall Street had come to expect." WWE also "struggled to manage expectations for the launch of an online subscription video service." WWE CFO George Barrios said that WWE Network since its launch has "drawn more than 660,000 U.S. subscribers and it is on track to reach a goal of one million by year-end." But CJS Securities Managing Dir of Research Daniel Moore said that the company's latest guidance "implies the network's fixed costs will be much higher than expected." PAA Research Founder & CEO Bradley Safalow said of WWE, "This management has a history of over-promising and underperforming." He described the online network as "black hole" (WALL STREET JOURNAL, 5/17).

INDUSTRY IS WATCHING: QUARTZ' John McDuling wrote WWE's decline is "dispiriting news for people who hope content providers will eschew their relationships with cable companies and sell content directly to consumers over the internet." Other content owners, "including sporting organizations and the likes of HBO, will no doubt be watching the WWE experiment closely." Markets "have a tendency to be short-sighted, and WWE’s system might still prove to be a smart move in the long term." But it "suggests that breaking out of the cable bundle is not a painless exercise." BTIG ‎Managing Dir of Media & Technology analyst Rich Greenfield said, "It may dissuade existing … content providers from trying to go over the top, away from the cable bundles authentication model. WWE tried to double-dip" (QZ.com, 5/16). At presstime, shares of WWE were trading at $10.97 per share, down 2.66% from the close of business Friday (THE DAILY).

OFF THE TOP ROPE: FORBES' Dan Alexander reported McMahon lost $350M as of market close on Friday, as shares in WWE "took a beating from investors." That drop "immediately knocked the WWE boss out of the billionaire ranks, putting his net worth now" at an estimated $750M (FORBES.com, 5/16).